“European ESG Data Trends Survey 2024,” a new Bloomberg survey published on March 5, sheds light on the formidable challenges faced by European firms when it comes to managing the surging volume of ESG data.
“If firms cannot organize their ESG data, they cannot effectively make decisions using that information.”
The survey, conducted in-person between September and November 2023 at seven Bloomberg ESG Tech & Data events in European cities, involved about 200 financial market participants from London, Stockholm, Geneva, Amsterdam, Frankfurt, Paris, and Milan.
It asked respondents about ESG data prioritization, challenges, and data management practices, underscoring the critical importance of effective data management in the realm of sustainable finance.
Accessing ESG Data
According to the survey, regulatory compliance remains the foremost priority for accessing ESG data, with 35% of respondents emphasizing its significance. Following closely behind is the imperative of meeting climate risk and net-zero objectives, noted by 18% of participants.
This heightened focus aligns with the introduction of the Corporate Sustainability Reporting Directive (CSRD) in the European Union (EU), which is anticipated to augment both the quantity and quality of company-reported ESG data in the years to come.
However, the optimism surrounding the regulatory push is tempered by concerns over the coverage and quality of company-reported ESG data. An overwhelming 63% of respondents identified this as their biggest concern, underscoring the need for robust data management solutions to ensure reliable and comparable information.
ESG Data Management
When it comes to managing ESG data, the biggest challenge was “handling constantly evolving and new data content,” reported by 41% of respondents.
Linking ESG data content to existing entity and instrument data was the second biggest challenge, noted by 25% of participants. Meeting reporting requirements, selected by 18%, and managing multiple ESG vendor feeds, reported by 16% of respondents, also emerged as significant hurdles.
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While the data coverage gaps are recognized as problematic, the survey underscores that onboarding new ESG data can be a “resource intensive process that firms may not have the bandwidth to do more than once or twice a year.”
Divergent Approaches to ESG Data Management
Faced with these challenges, firms are adopting diverse strategies for ESG data management: 38% of respondents centralize their ESG data management with a proprietary solution, while 32% opt for individual management by each business unit.
A smaller fraction, 10%, chooses to outsource to third-party vendors, and 20% are still in the process of formulating their data management strategy.
Bloomberg’s Head of Sustainable Finance Data Solutions, Nadia Humphreys, emphasized the critical role of effective data organization:
“While quality and comparability remain a global challenge, data management is coming into sharp focus for firms in Europe. If firms cannot organize their ESG data, they cannot effectively make decisions using that information.”
Aa ESG considerations become increasingly integral to investment decisions, the Bloomberg survey underscores the imperative for European firms to navigate the ESG data seas effectively. The ability to overcome challenges in data coverage, quality, and management will undoubtedly play a pivotal role in shaping the sustainable finance landscape in the region.
Editor’s Note: The opinions expressed here by the authors are their own, not those of Impakter.com — Featured Photo Credit: Olga Lioncat.
